Yahoo Japan to ally with Google Search?

In what would be a stunning blow to the massive search alliance between Microsoft and Yahoo, Google is apparently zeroing in on a deal to grab the algorithmic search business for Yahoo Japan, said several sources.

The agreement between Yahoo Japan and the U.S. search giant could be announced as early as today in Japan, sources said, and could be part of a larger deal between the two companies around mobile or other products.

News of the deal could come when Yahoo Japan announces its financial results at 3:10 pm Japan time on July 27, which is 11:10 pm PT today.

If Google (GOOG) and Yahoo Japan join together, the pair will control almost the entire market share of search in the Japanese market. Paid search is apparently not part of this deal at this time.